Centrifugal federalism and the cooperative model in Brazil

Abstract

The present study analyzed Brazilian federalism, from a fiscal and tax perspective, focusing on the reduction of the ICMS proposed in 2022, defining federalism and its mechanisms as the first axis, and analyzing the effects of the reduction of the ICMS on fuels at the state and municipal levels, having as a procedure the literature review and the documentary study. The main reference used are: "Fiscal decentralization, social policies, and income transfer in Brazil" (CPAL); Economic Formation of Brazil (FURTADO); Introduction to Federalism and Fiscal Federalism in Brazil (GADELEHA). Conducting an analysis in relation to the return to the tax reform debate. As expected, the internal economic crisis, together with the global scenario of war and the Covid-19 pandemic, brought a dramatic event in the increase in prices, and after regulation of the ICMS of the states, it was impossible to collect up to R$ 1.7 billion in taxes, due to the difference in percentages of receipt between the federative entities, having negative effects in the short and long term, showing the fragility of the federative entities. Thus, it is concluded that the proposed change had a moderate impact on the discussion on the current logistics caused by the ICMS, heating up the topic of tax reform and elucidating a little of the functioning of VAT and IBS.